Indegene Limited ($INDGN)

Ladies and gentlemen, good day, and welcome to the Indegene Limited Q4 and Annual FY '26 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand over the conference to Mr. Abhishek Agarwal, Head of Investor Relations, Indegene Limited. Thank you, and over to you, sir.

Thank you, moderator. A very good morning to all of you and thank you for joining us today for Indegene's earnings call conference for the fourth quarter and full year ended financial year 2026. Today, we have with us Mr. Manish Gupta, Indegene's Chairman and CEO; and Mr. Suhas Prabhu, CFO, to share the highlights of the business and financials of the quarter. I hope you have gone through our results release and the investor presentation, which have been uploaded on the website as well as the stock exchange website. The transcript of this call will be available in a week's time on the company's website. Please note that today's discussion will be forward-looking in nature and must be viewed in relation to the risks pertaining to our business. After the end of this call, in case you have any further questions, please feel free to reach out with the Investor Relations team. I now hand over the call to Manish to make his opening remarks.

Thank you, Abhishek. Good morning, everyone, and welcome to Indegene's Q4 FY '26 earnings call. I want to start by acknowledging what this quarter and the fiscal year represents and not just in numbers, but also in strategic progress. FY '26 was a milestone year for Indegene on 2 fronts, Q4 FY '26 was the first ever quarter in our history where our revenues exceeded INR 1,000 crores. And for the full year, our revenues crossed INR 3,500 crores. This is another first. Two thresholds crossed in a single quarter. More importantly, these are not isolated milestones. These are culmination of deliberate compounding work across our customer portfolio, our domain capabilities, our technology stack and our people. I will cover 4 topics today; our customer portfolio performance, our GenAI-led innovation wins, our competitive differentiator and our forward outlook. My colleague Suhas will take you through the financial details. So let's get into the financial snapshot. As I said, this was our -- Q4 was our first INR 1,000 crores-plus quarter. FY '26, our revenues came in at INR 35,105 million, which is our first more than INR 3,500 crores year. Our growth for the year in terms of, in INR was 23.6% and in dollar terms, 18.2% year-on-year. Now let's talk about our customer debt and relationships. I'm going to start off with the top 20. Now across 27 years in life sciences and as an operating partner to all 20 of the 20 global pharma companies, we have built a kind of relationship density that compounds over decades not quarters. For our top 20 customers, FY '26 was a year of strategic deepening. We expanded significantly with several of our top 20 accounts. Let me start with the top customer, our largest customer. The customer is broadly stable in FY '26. There's a bit of a hold due to a delay in a highly anticipated breakthrough as we continue to invest in the relationship. The breakthrough came at the year-end. We won a significant Tectonic engagement starting with Germany and Suhas is going to talk about this later when he talks about the deals in the quarter. Now this then matters not just in its own right, but a very important beachhead with early results demonstrating value. We are now actively in conversations with additional markets. The potential here is pretty significant. And FY '26 is where we expect it to convert into visible growth and we are hoping this customer is going to cross over and become our first $50 million-plus customer. Another milestone. A third customer account this year crossed the $25 million revenue threshold reinforcing the depth and stickiness of our relationship. Finally, in Q3 of this year we closed a multiyear omnichannel deal exceeding $10 million in ACV. This was a fairly strategic deal. This is going to be a template for the industry with a very large company and positioned us very strategically in this time. The latter half of FY '27 we'll see this deal converting to revenue. Across the top 20 as a group, revenue grew from INR 22,082 million to INR 25,200 million in FY '26, compounding expansion driven by portfolio breadth and recurring engagements. With that, let me move to beyond 20. This has been faster growth on an expanding base and this is where I want to spend a moment. Because the growth beyond our top 20 tells an important story about Indegene's scalability. Our total active customer base grew from 73 to 91 during the year. The number of customers contributing more than $1 million in annual revenue grew from 41 to 53 and across 30% increase. Growth in this cohort outpaced the top 20 on a percentage basis, demonstrating that our land and expand model is working further down the customer pyramid. So these newer relations are already scaled to $5 million ACV engagements. The message here is clear. Indegene is not just a top heavy business dependent on a handful of accounts, we are building a diversified durable portfolio with accelerating momentum at every year. This is the engine what compounds the outside top 20 cohort is where today's $1 million relationships become tomorrow's $25 million relationships. And FY '26 already saw multiple new customers cross the $5 million ACV threshold. The progress we have inside the top 20 over the last decade is now played in [indiscernible] 1 tier down and it is doing faster because of a few things. One is our own credibility and scale as a company and also because Gen AI compresses the time to value. Now let's talk about some of our AI-led solutions where one of our values, innovation is truly in motion. AI has been at the core of Indegene strategy for a decade. I remember setting up the office of CTO more than 10 years back and starting investing heavily just in AI. The tangible proof of our ability to leverage AI is visible in our industry-leading revenue per employee, now at approximately USD 75,000 per annum, up from USD 66,000, 3 years back. This is a step change in productivity driven by embedding technology and AI into how we deliver coupled with our predominant managed outcome pricing model. And we have not stopped. We have a program called Transform AI inside the company. This program is targeting a further step change in adjusted revenue per employee as we continue to win upstream in adjacent areas and the new revenue pools opening due to AI. All this stuff while we reengineer our own processes from the ground up. This is what gives us confidence not only in our competitiveness, but also on the operating leverage in the coming years. What is changed in FY '26 is pace of customer adoption and the size of the mandates we are winning on the back of Gen AI-led solutions. I will talk you through some specific wins, each demonstrating a different dimension of our capability. Let me again talk about the Gen AI-powered omnichannel orchestration deal with a top 5 customer, which I alluded to in our customer segment just a few minutes back. This customer selected Indegene for omnichannel orchestration using our Invisage platform and Tandem data capabilities acquired through BioPharm. The mandate covers personalized Gen AI targeting across a multiproduct U.S. portfolio, which is north of $1 billion, approaching patent expiry. We are deploying on an outcome-focused commercial model, maximizing the profitability window of mature assets. This Gen AI embedded directly into revenue outcomes of this client. With that, let me move to another one. Now this is end-to-end commercialization for a midsized biotech firm. A midsized biotech firm chose Indegene as a sole commercialization partner entrusting us with full life cycle, CRM implementation, global marketing content creation and multichannel deployment. This is an integrated model that differentiates Indegene, a single partner capable of running the entire commercial engine. Here, the client actually said this is not -- while we are doing CRM implementation, it's not just a technology implementation. It's a business transformation project and engagement, and we need somebody who understands our business well. Let me talk about another one, an emerging pharma company for a complete product launch. An emerging pharma engaged Indegene to manage an end-to-end product launch across both commercial and medical functions. This is a replicable blueprint for hundreds of mid-tier and specialty pharma companies entering commercialization, a segment we are deliberately targeting as a high growth opportunity. Let me move to the fourth one. AI-driven pharmacovigilance for safety. This was a large medical devices client. For large medical devices client, we are now managing global pharmacovigilance workflows using our proprietary NAEM, adverse event management technology, which is all AI based. This has significantly reduced manual based processing volumes and accelerated aggregate reporting time lines. The win demonstrate our AI-led innovation extends into medical and regulatory domain, not just commercial. And given I just spoke about medical regulatory domain, let me talk now about one on the regulatory side after having spoken about safety. We set up a global innovation center model for a very fast-growing company, more than $100 billion market cap. Within our enterprises medical services segment, we piloted a global innovation center where we are reimagining R&D operations from the ground up. We are using Gen AI to accelerate FDA submissions and compress molecules speed-to-market. With this scale as anticipated it represents a structural change in how pharma companies approach R&D operations. You think about it, you're cutting down the cycle time from a couple of months to filing to a few weeks and that is unlocking significant value for companies and for patients and Indegene is the one partner enabling it. The next one I'm talking about is super exciting, though it's a pilot very early days, but it has the potential to truly transform the industry. Agency-led AOR, 3 months to 3 days. 3 months to 3 days. This is what we demonstrated in a top 20 company for a very strategic upstream brand work. We piloted an agency of record model without the agency working with a large pharma customer, demonstrates the ability to create scientific deals created and give final concepts in 3 days with our content super agents. This is what typically agency-of-record in the United States, Europe typically does in a few months and a very expensive process. This included doing the voice of the customer research, primary research using synthetic KOLs, using our proprietary Invisage and Tandem products. This was achieved through live co-creation workshops with the clients, replacing isolated agency processes with real-time technology enabled operating model. This pilot along with what I spoke about in the regulatory affairs, global innovation model has genuine industry transformation potential. We are watching adoption signals closely and very confident these pilots will succeed and get into real engagement in this financial year. Given the nature of these engagements, we continue to over invest in them. We're already seeing significant interest in this engagement in the industry overall and we are talking about them with all the clients and people are very open and receptive to learn from these. And we believe this has the potential to position us very strongly for the future. I also want to talk about what specific sets us apart when we win these deals and what we learned in FY '26 because it shapes everything we do. Gen AI equalizes access to technology. It does not equal access to knowledge. Every service firm now has the same foundation models, the same APIs, the same coding copilots. What separates winners from the rest is the depth of domain knowledge they bring on top and how systematically they convert it into agentic human and loop workflows to deliver real business outcomes. For Indegene with 27 years of life science expertise and all of our workforce in deep domain roles, medical, within medical different therapy areas, different specialization, brand, creative, digital, analytics, tech, you name it, I can go on and on. Experiences of nuances of all the regulated and critical workflows, our own proprietary data. These things are just not relevant in the AI world, they are absolutely essential. These things -- wins are not isolated. They roll up into fine next generation operating models we are now actively running in the market; one click submissions, human-less medical legal review processes, agentic AI, AI embedded engagement and intelligent R&D operations. Each one of these replaces a manual fragmented industry process with a platform driven AI embedded one. Each of the category, we believe Indegene will find in years to come. With that, let me move to another important thing which we have been happening for some time, and it's important that we talk about this very directly, our category. We have a strategic partner for life sciences. And the most common mistake we see how we are analyzed is the one we want to correct today. Indegene is not an IT services company that happens to serve life sciences. Indegene is the strategic operating partner for the life science industry, purpose built over 27 years to design and run complex regulated medical -- commercial, medical and R&D operating models that define how this industry, very important industry works. This distinction is not semantic. It is structural and it changes everything about AI affects -- how AI affects our business. This isn't a claim. It's a pattern. Every decade, one force that reshape life sciences. In the 1990s, it was globalization. Unfortunately, for the industry, we were not there as a company at that point in time. In the 2000s, it was moved to digital. We want to build digital field engagements very early one. In 2000s, it was content at scale, automated MLR and bunch of things like that. We built platform-driven content operations. Now as AI is at work, we already have and continue to run embedded AI operations at scale, and we've been doing this for a decade. This will especially transform Indegene needs, we don't react. We're already running a new model. And as I mentioned, and I'm going to say again, we started a decade back. Post structural defenses -- define our position and let me unpack each of these. This is fairly critical. We are a revenue partner, not a call partner. We are embedded in the commercial and medical functions that generate revenue for our customers. Our primary stakeholders in client organizations, Chief Marketing Officers, the brand heads, the therapy heads, Chief Medical Officers on the medical affairs side, regulatory, safety. These customers don't come to us to cut us, they come to grow our revenue -- to grow their revenue, launches, improve pipeline success, manage compliance and risk for them. AI is a growth enabler for our clients, not a to reduce time lines or partner like Indegene. The next one, and fairly important. Domain-led judgement intensive work, that's the work we do. Therapeutic content charges, regulatory submission, pharmacovigilance, omnichannel orchestration across the globe and very different markets requires deep domain judgement that AI augments, that is not a placing. And again, I want to emphasize, these are in regulated areas, very regulated areas. This is fundamentally different from coding or infrastructure. [indiscernible]. The third one and something which we I remember talking to a lot of whom we met during our road shows in '23. Our outcome alliance commercial model. In an AI-enabled world, effort days pricing is breaking down. Clients now don't pay for hours. The fastest AI does in seconds. Outcomes are becoming the new currency and we've been operating on outspoke and outcome-based contracts for years. We did not have to convert. We are the ones who rolled this playbook. Some of these -- take a step back and look at actually who plays in our space, who are the players, competitors. Strategic advisers bring frameworks that exit before execution. Global integrators bring scale but life sciences debt. It offshore scalers compete on volume efficiency, but that is a fundamentally different category from ours. [indiscernible] are debt that platform leverage the strength of operating model. Indegene is the only player in life sciences that combines deep domain expertise, embedded AI platforms and outcome ownership at enterprise scale. Our true competition is agencies and CRO, and we are taking share from them accelerated by Gen AI. And the pie itself is growing. As we run the themes I just spoke about, we are absorbing spend pools that did not previously sit with service partners like us, agency budgets, CRO clinical operations, internal regulatory costs, Gen AI is just shifting share, it grows our addressable market. With that, let me come back to FY '26. FY '26 is not just a financial milestone. We delivered 4 strategic achievements that set up Indegene's next chapter, not only for FY '27 but beyond. We made 3 acquisitions, BioPharm strengthened our omnichannel data and targeting capabilities in the commercial segment, one in communications are new market entries. There are strategic additions of people with deep expertise and local market knowledge in key European geographies. This matters because as we take our global delivery model in Europe, credibility and relationships on the ground are decisive. We just spoke about our Tectonic engagement with our largest client in Germany, right? And now you can understand why we did [indiscernible] as an acquisition. These teams give us exactly that, the ability to expand engagement from regional to global with local legitimacy. Tectonic at scale. That's the next one. Tectonic is our transformation model that combines Gen AI with deep creative expertise to disrupt the traditional agency approach of developing creative through effort intensive cycles that stretch over months. At year end we have secured 5 customers, 2 of them have already transitioned from pilots projects to long-term engagements. Crucially at Q4 win in Germany with our largest customers provides strong momentum heading into FY '27. Initial markets are actively in conversation, Tectonic is on track to become a material growth driver for enterprise commercial in FY '27. Third one and we spoke to you about in our Q2 earnings call, we recruited senior leadership talent and strong leaders across our commercial medical leadership, strengthening our ability to engage at the C-suite level and we are having more and more of those conversations as we pursue more complex, larger transformation mandates for our clients. Last but not least, technology leadership. We maintained our innovation edge by embedding Gen AI across the platform. Our next-generation content super app and medical writing platforms both built by reimagining end-to-end customer workflows are now in active deployment. Cortex is continuing to scale and get embedded in all the stuff we do. These are not incremental upgrades, they are strategy to finding products. Together, these 4 moves in organic debt in Europe, Tectonic has scaled senior go-to-market bench and category-defining platforms are what gives us conviction in growth in FY '27 and well beyond. With that, let me pass it over to Suhas.

Thank you, Manish. Good morning, everyone. Let me dive straight into the financial performance for the quarter and the year. Quarter 4 revenue came in about INR 10,000 million, the first quarter in Indegene's history to cross this threshold, growing 6.5% quarter-on-quarter and a strong 32.8% year-over-year. For the full year, the revenue was INR 35,105 million, reflecting a 23.6% growth in INR terms and 18.2% in USD terms, ahead of FY '25 on both measures. Moving over to profitability. Our Q4 adjusted EBITDA came in at INR 1,889 million, growing 23.2% year-over-year. The full year adjusted EBITDA totaled INR 6,793 million, up 20.8% year-on-year. Effective Jan 2026, we have categorized our forward contracts as cash flow hedges under Ind AS 109 and the adjustment to the EBITDA is made to reflect the impact on profitability if the contracts that were contracted between April 2025 and December 2025 were also considered as cash flow hedges effective start of the year. We had indicated this matter to be under consideration in our earlier call. The high volatility in exchange rates, especially the depreciating INR against USD towards the closing of the quarter has resulted in an incremental charge of INR 241 million in Q4 on the unexpired forward contracts. And therefore, this is the adjustment that we have done in the EBITDA from a like-to-like comparison. Considering this charge, the reported EBITDA would be lower at INR 1,648 million. Moving ahead to PAT. We had a lower interest income due to lower yields and a higher amortization as was mentioned in our Q3 earnings effective the acquisitions that we concluded in the recent past. Further, we have provided INR 203 million towards the estimated cost of settling the U.S. class action lawsuit filed in 2020 alleging breach of PCPA. I will delve more on this matter a little while later. This is a onetime nonrecurring provision reflected as an exceptional item and this impacts the PAT for Q4 and FY '26 adversely. Hence the Q4 PAT came in at INR 797 million and the full year PAT of INR 4,011 million, a 1.4% decline. Excluding these nonoperational onetime expenses and factoring retroactive adoption of the cash flow hedge accounting from the start year, PAT would be higher at INR 4,583 million, growing 12.7% year-on-year. On an adjusted basis, the underlying profitability of the business is meaningfully stronger than the reported figures suggest and the year-on-year trajectory is firmly positive. I would request you to refer Slide 15 of the investor deck for more details. Coming back to the exceptional item and the provision of INR 203 million. This is pertaining to a long outstanding matter, a U.S. class action lawsuit in 2020 relating breach of the Telephone Consumer Protection Act, which we had disclosed in our DRHP/RHP and provided updates as the case made slow progress over the year in our subsequent financials. In January 2026, both parties commenced a mediation process as was recommended by the court. With multiple rounds of negotiations over the last 3 months facilitated by the court appointed mediator, we believe that we have now reached a stage of potential settlement and the ability to quantify the liability basis the terms by the mediator. As of today, the mediation process is close to completion with the terms being drafted while the court approval is still awaited. Hence we are making this provision basis such terms and the INR 203 million is the provision of the anticipated settlement. Further, the origin of this case relates to an engagement in FY '19-'20 where we used facts as for outreach. Facts were rarely used prior to this engagement. And hence, we do not believe that there are any further such liability exposures beyond the one instance that we had in 2020. With that, I would want to spend a moment on the strong cash position. Cash generation is also another way to assess the operating health of the business and not just PAT. On that measure, FY '26 was a standout year. Operating cash flows were INR 6,508 million versus INR 4,419 million in the prior year, which is a 162% ratio on PAT. This is, of course, higher due to the higher noncash expenses and amortization charges, but also an improvement in the DSOs to 63 days from 72 days in the past year. Free cash flows were a strong INR 6,065 million versus INR 4,119 million in the past year. Our balance sheet at the year-end reflects this trend. We closed FY '26 with a cash and investment position of approximately INR 15,385 million, just INR 1,258 million lower than FY '25 despite INR 7,253 million of outflows towards the acquisitions that we made during the year. With this, let me move on to the dividend announcement. Consistent with this cash and reflecting the Board's confidence in the business, we have proposed a final dividend of INR 2.25 per equity share for FY '26. This compares to INR 2 per share last year, a 12.5% increase. This recommendation is subject to shareholders' approval at the upcoming AGM and reflects both the strength of our FY '26 earnings and our commitment to delivering consistent returns to shareholders alongside continued investments. Moving further to the segmental performance, both Enterprise Commercial ex BioPharm and EMS grew by approximately 17% and 16% year-on-year, respectively. Even BioPharm acquired in October 2025 grew by 15% sequentially in Q4. Our geographical mix remains stable with North America at 71.6%, Europe at 25.5% and the Rest of the World at 2.9%, with North America contribution increasing marginally by approximately 2% due to BioPharm, which is entirely a U.S. focused business. Importantly, the pace of customer conversations and AI-driven innovation is now distributed across both medical and commercial segments and this gives us confidence that both enterprise commercial and enterprise medical will be meaningful growth contributors heading into FY '27. Finally, coming into our Q4 deal activity. Our Q4 bookings reflect sustained deal momentum. We closed 1 deal of $3 million plus ACV in our clinical business with a new customer. Further, we closed 7 deals of $1 million plus ACV during the quarter, 4 of which are from our top 20 customers adding to the enterprise commercial segment, including the Tectonic engagement for Germany with our largest customer. Further, there is an expansion of an existing omnichannel project with a midsized pharma company and we signed 2 engagements with new customer, an engagement with a biotech player providing med info services, which is part of our enterprise medical segment and an engagement to operationalize 4 digital commercial capabilities for an upcoming pharma company's new launch of the drug pre-course launch activities. These wins confirm that our go-to-market investments are translating into consistent new pipeline generation and conversion. These wins, combined with earlier wins provide revenue growth momentum heading into FY '27. Further, you will also select the investments that we made resulting in 150 basis points impact on our EBITDA margins that we mentioned 2 quarters ago. With the growth momentum, we believe that we are on track to improve our profitability and EBITDA margins in FY '27 and the second half of FY '27 will see us revert back to the earlier levels of higher margins with these investments getting fully absorbed and delivering growth. Further, we will also see a positive impact of the interest income with a high cash balances and stable yields. Amortization stabilizing and coming off towards the latter half of FY '27 and the impact of the one-off and exceptional items fading away and we believe that the impact on PAT in FY '27 will see a significant upward movement. With that, let me pass it on back to Manish for the outlook.

Thank you again, Suhas. 12 months ago as we entered FY '26, I used the phrase cautiously optimistic. I would be precise about how I would characterize the mood entering FY '27 and why it is meaningfully different. The 3 concerns that warranted caution a year ago, new U.S. administrative uncertainty, regulatory policy overhang and macro volatility have largely been resolved. The pharma industry demonstrated resilience and strategic importance through CY, calendar year 2025 in the industry growth of 9% versus 6.4% in CY 2024. Looking ahead, the industry is positioned to grow at a healthy 5% to 8% CAGR from '26 to '28. This is our customer base stable, funded and growing. Against that backdrop, our own pipeline entering FY '27 stands stronger higher than last year with balanced strength across both our top 20 customers and outside top 20 cohorts. The diversification of our pipeline is as important as its size. It means we're not dependent on a handful of renewals or 1 large deal closing. I want to be direct, we're not providing formal revenue guidance. What I will say is this. Our customer portfolio is growing in both depth and breadth and the outside top 20 segment is growing faster. Our Gen AI-led solutions wins span across every customer segment and both business lines, commercial and medical, and it is gaining significant traction. Tectonic has customer validation and is set to generate meaningful FY '27 revenues. Our pipeline is larger, more balanced and better qualified than at any prior year end. Our competitive position is strengthening significantly in context of AI industry trends. In an AI-led world, the competitive structure of a market is being rewritten in our favor, agency RO and CRO spend consolidating into specialized technology-led partners and Indegene is the most credible such partner in life sciences. And this trajectory extends well beyond '27. We believe Tectonic, AI-led omnichannel deals, AI embedded operating -- medical operating models, top 20 cohorts, outside top 20, all will continue to mint new $25 million-plus relationships and have the potential to drive multiyear growth. With that, I would say we enter FY '27 not cautiously optimistic but exalted and confident. Confident to convert pilots into platforms, platforms into operating models and operating models into the industry's new default. This has been Indegene's pattern across every prior [ inflation ] in life sciences. And it is the pattern we are running now from promise to performance. That is what we believe FY '27 and the years beyond will demonstrate. That's all I had. We can open it for questions. Thank you.

Thank you. We will now begin with the question-and-answer session. [Operator Instructions] We will take the first question from the line of Prakash Kapadia from Kapadia Financial Services.

I had 2 questions. The revenue per employee has increased to around $75,000 from $67,000 last year. Is it just the on-site mix increase or there is something else or any other metrics which you can highlight? And secondly, if I look at more than $10 million revenues, there are 10 clients which are same as compared to last year. So is there a product life cycle for larger clients, which is showing up there because we've not seen any increase in number of clients in that cohort? So these are my 2 questions.

I'll start off with latter one and pass it on to Suhas. We hear that cohort, you're right, it's stable. It's also a function that at least one of our clients was just tad below that $10 million, right? And from a categorization perspective, $9.9 million something, right, falls into the other bucket. And these customers are taking a bit more time to change their operating model, adopt some of the platforms and discussions we've been having with them. Having said that, we are very bullish that this cohort also will increase. It's just a matter of cycle times and they do change management internally. Suhas?

Thank you, Manish. And moving to the first question on the revenue per employee in our fact sheet, the KPIs, you'll observe that our on-site offshore mix has remained fairly stable over the past many years, actually on-site increasing marginally over the last couple of years. But having said that, I would like to highlight that over the last 5 years, our RPEs have consistently grown from $51,000 to close to $75,000 today and also from $66,000 to $75,000 on a year-on-year basis. So there is a sustained effort to increase this in combination with the technology impacting our operations positively combined with the outcome or output-based pricing model in our engagement, which help us retain the benefits of the productivity increase without being dependent on balance sheet based or input prices.

I would add one more line. As I said earlier, in this world, the competitive structure of the market is being rewritten and right now all the directions, it looks like that's being written in our favor, right? And hence, the quality of the kind of engagements we are running with our customers are much more strategic, which also is resulting in the kind of contracts we write.

Sure. And lastly, Suhas is it fair to assume debtor days will be more or less stable at these levels and we can have growth also or any major change envisaged going forward?

So debtors have, of course, reduced significantly, resulting in higher cash flows. And we are seeing a trend reducing from mid-80s about 5 years ago to the 60s as we speak. But having said that, I would guide towards mid-60s to 70 days on a steady basis.

We will take the next question from the line of Prolin Nandu from Edelweiss Public Alternatives.

Just 2 questions from my side. One is on this AI initiative that you have talked about. Now what I gather is that what is our dependable -- I mean what is it that works in our favor is the domain knowledge and the regulatory aspect of the industry in which we deal with. Just wanted to -- wanted your thoughts on how dependable are these moats, so to say? Don't you think that over the period of time, maybe this domain knowledge can also be commoditized by some of the large LLM players like they have been doing in other industry. Why do you think that cannot happen in our industry? So that's my first question on the AI side. And the second question is on the margin, right, where you have talked about some of the investments that you are making and you coming back to your previous high sometime in the second half of FY '27. My question here is that what is the risk that this could probably catch up to stay relevant in the AI world. We continue our investment part and not bear the fruits of that operating leverage that we are envisaging. So yes, pretty much the questions are more on a medium-term outlook and to do with AI.

That's fair question. So let me start with the first one. Our real moat over here, which we continue to invest and solidify every day is domain expertise, right? And domain expertise is just not a very broad term, right? For example, when I spoke about this -- the whole 3 day -- 3 months to 3 days thing that required therapeutic area expertise, that required rather medical expertise, that required creative expertise, right, very market nuanced expertise for different market. It also used our own proprietary data sources, right? So along with domain expertise, we are also bringing in our proprietary data sources. These -- that -- the LLMs and most of the cases we are the see those whenever we're building our tech product, LLMs on their own are not solving for the problem. We are using all the LLMs, all the frontier models. We are working with AI labs, names which you might have heard of, but our cutting-edge labs in different parts of the world. But we have to bring a couple of them together along what our technologies start to solve different problems, right. And the reason why we are able to articulate that well is again the domain expertise. So at least in the medium term, call it 3 to 5 years, we don't see LLMs having the ability to do this. LLMs are not still operating -- they don't have the reliability when you're talking about in operating grade, right? So the human loop is going to be actually even more important. That is there has been in the FDA kind of call out to one of the companies over just last 2 weeks, right, a warning letter that looks AI generated. Now what happens in the medium to long term, that jury is still out. But domain expertise and data, right, embedded in these platforms, which are going to be a combination of multi platforms is the approach we are taking and we believe that's fairly dependable in the next -- in the medium term. And the second question was the AI investment. You're absolutely right. The reason why you see us talking about just our margins recovering over a couple of quarters is because we continue to invest. We have baked in a bunch of investments. This year, our R&D cost as we call it, has gone up. It's about 2% of our revenues. We're making those investments. We have made GTM investments, right? We are increasing those investments as well and a bunch of areas in the domain expertise because customers also need much more handholding that they're going through this turn. So those investments have been factored in. And one more -- one reason why we're not saying that our margins will expand beyond what they used to be, while there might be leverage over there is because we believe that anything above, let's call that range which we are operating in, we are going to reinvest in the business. But maintaining this broad range is very doable as we see it today.

We take the next question from the line of Raghav Maheshwari from Kamakhya Wealth Management Private Limited.

Congratulations on good top line [ vote ]. Sir, my first question building up on the question that the last participant had, I just wanted to get a bit of a technicality here. Sir, we talk about generative AI, we talk about Cortex AI. Just wanted to understand what kind of AI is that. Is it like an in-house trained element that is or it is like a wrapper with proper role defined by your domain expertise? So just wanted to understand what kind of AI we are into.

So what we are doing is let's think about it, there are frontier models, right? And there are lots of them, right? There are obviously, the large language ones, there are much more specialized ones, right? We are using those along with a bunch of very specialized things, for example, computer vision, right? We partner with somebody, large action models, right? That's another category. So I can go on and on. There are a bunch of these very specialized things along with the large frontier models, we are partnering a bunch of those things, right? We have our own engineering team, which is building various stuff. Those are the platforms which we are integrating from a pure tech perspective, and we realize different combinations work for different use cases, right. Now what is Cortex. Cortex is a knowledge engineering platform, right, which is meant for developing agentic workflows with all the security, enterprise security, scalability, right, meant for life sciences. That enables us to build agents quickly using a knowledge engineering approach. We have also decoupled the domain layer from the technology layer, right, so that we can very quickly scale up many use cases, which is what Cortex has enabled, right. So that's the broad approach. Now we continue to build agents, right? And by the way agents is just one part of it. How do you reconfigure workflows? How do you think about skills in context of that workflows, all that stuff is up for change, right. So those new skill sets, new workflows along with this agents, that's the direction the industry is moving in. And of course, the agents are using the platforms I spoke about.

Right. That was good information. And sir, second thing which I wanted to ask a little bit if you can throw light on FY '27. What are some of the growth drivers for the year? And what kind of revenue trajectory are we looking for? And most important thing is what are we planning to do differently than what we did in FY '26?

Actually, FY '27, I think is going to be more a year of scaling what we did in FY '26. FY '26, we did a bunch of things different. We had investment in talent, we crystallized on solutions, right with bunch of our clients that is across the board, medical. We won some very marquee engagements I spoke about earlier. So I don't think we are in a mode to do anything different from a scale perspective, right in this -- everything which we started on FY '26, we feel that we vindicated that we are moving in the right direction, right? And FY '27 is going to be doubling, tripling down in them, right, to scale, whether it's on the customer side, engagement side, revenue, rejigging our own internal locks in ways of doing things. You want to add on.

Maybe to put a little more color to that, like what Manish mentioned on the gen AI-led, our customer engagements which have moved from experimentation, certain fields kind of POP to hard dollars and long term engagements and commitments. That combined with also the Tectonic investments that we have been doing over the past many quarters now getting crystallized with 2 customers moving into long-term engagements most specifically even our largest customer signing up with Germany as a region but also active and very high probable pipeline for many other regions with the same customer. And finally, I would add the consistent $1 million-plus wins that we have been talking about for the past few quarters give us the confidence of the strength of the revenue visibility, combined with the strong pipeline that we continue to generate and carry as we speak. One last final comment that $10 million win that we had mentioned in quarter 3, while it has kicked off and started from a revenue recognition perspective, the revenue recognition is deferred because this is an outcome-based pricing model and will be entirely recognized in FY '27. So these are some of the specifics of why we feel confident as we move into FY '27.

We will take the next question from the line of Lakshmi Narayan from Tunga Investments.

Few questions from my side. I understand that we work with top innovator companies. Just want to understand what kind of solutions we have for generic companies or even small size companies. They may find it difficult to offer the 70%-plus revenue per percentile. So what kind of -- is it a market that exists or you intend to expand through either generic companies as well as small or mid-sized companies into pharma.

Mid-sized and small companies is something which we are expanding rapidly. We are seeing significant traction. In fact, I spoke about some of the deals where we are launching a product for a small biotech, right? And our model of launch is becoming the way to go for a lot of these companies. Actually, we have a customer talking about in public domain that they were planning to hire a lot of reps, but then they must shore up and they had to add only 25 reps and getting increased amplified by our omnichannel engagement. There's another customer where we are doing pretty much end-to-end medical and commercial functions. So the whole let's call it biotech, smaller segment, that's attractive segment for us and we believe we will scale over there. That segment also seems to be getting tailwinds in general, right? The biotech in the U.S. had become very tough from a funding environment, it's coming up now, right, and been on the upswing. So that is one part. As far as generics are concerned we do some work with them, right? We have some revenues coming from generics. But if I just contrast the opportunity we have with innovative pharma companies, where as I mentioned earlier that we believe we will have $100 million clients in some years, right, versus, let's say, the other part, so we want to prioritize the resources accordingly.

We will take the next question from the line of Yash Mehta from R Ventures.

Sir, I wanted to ask what has been the organic growth in constant currency terms in Q4 FY '26?

Constant currency terms year-on-year growth has been 12% organic and a little north of 3%. You can look at even our financial disclosures in the investor presentation where we have provided the ex BioPharm pro forma professional financials and that provides more details beyond the other new portfolios.

And sir, how does the margins span out in FY '27 considering the integration with BioPharm?

So the integration of BioPharm was successfully completed actually ahead of schedule towards the end of February. The transition services from the seller was originally planned to get concluded as of end of March. This transition -- completion of the transition would be adding to basically synergies on the G&A side. But as we speak, we are also looking at synergies on the data subscriptions on the business operations and eventually go-to-market. And we would progressively start impacting us through the quarters in FY '27 more positively. But G&A would be the immediate impact that we anticipate to see coming in, in the next quarter itself.

Ladies and gentlemen, we will take that as the last question for today. I now hand the conference over to Mr. Manish Gupta for closing comments.

Thank you. I want to close by thanking all our 5,000-plus colleagues globally whose dedication and expertise make every one of these wins possible. I also want to thank our customers for the trust they have placed in Indegene. And of course, our investors and analysts for their continuous engagement and support. Thank you so much.

Thank you, members of the management. On behalf of Indegene Limited, that concludes this conference. Thank you all for joining with us today, and you may now disconnect your lines. Thank you.